The world's biggest miner saw its revenues tick up to US$20.7bn, as against US$20.5bn in the first half of fiscal 2018, and operating profit was broadly flat at US$7.3bn. Profits were slightly up, cash flow was slightly down, and positive working capital movements were offset by taxes paid.
Overall, the cash balance fell slightly, to US$15.1bn from US$15.8bn in June 2018, but the balance sheet remains very strong. Current assets total US$26.4bn as against current liabilities of US$10.4bn, while net debt was reduced further, to US$9.9bn from US$10.9bn in June.
Productivity guidance for the full-year FY2019 is expected to be “broadly flat”, with full-year unit cost guidance unchanged.
On the near-term global economic outlook, BHP remains cautious. The company is expecting China’s economic growth to “slow modestly” during CY2019, while the USA’s near-term prospects were described as “less certain”.
Supply picture complicated
Copper demand is expected to “grow steadily”. Iron ore demand is expected to be similar this year to last year, although the supply picture has been complicated by the recent tailings dam disaster in Brazil.
In exploration, BHP encountered oil at Trion in Mexico, hydrocarbons at Bongo −2 in Trinidad and Tobago, and had early success at the copper exploration program in the Stuart Shelf in South Australia.
BHP also acquired interests in the Orphan Basin offshore Eastern Canada and in SolGold (LON:SOLG), which holds the Cascabel copper project in Ecuador.
In early afternoon London trading, BHP shares were 0.6% lower at 1,788.80p.
Russ Mould, investment director at AJ Bell commented: “Half year results from diversified resources group BHP are a reminder that getting the stuff out of the ground smoothly is equally as important as finding the riches in the first place.
“Its results have missed expectations on multiple metrics after a series of production issues at some of its copper and iron ore mines. Rising costs have also been an issue.
“Higher iron ore prices as a result of Vale cutting production following its Brazilian dam disaster will help BHP’s earnings in the second half of its financial year. However, there is still the big issue of slowing economic growth in China and what that means for commodities demand in general.”
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